H E N R Y R . D E S M A R A I S , M D , M P A H E A L T H P O L I C Y A L T E R N A T I V E S , I N C .
W A S H I N G T O N , D C
M A R C H 2 8 , 2 0 1 4
DISCLOSURE
2
Dr. Desmarais has declared no conflicts
of interest related to the content of his
presentation.
Call your doctor today!
Boukus, Ellyn, Alwyn Cassil and Ann S. O’Malley, A Snapshot of U.S. Physicians: Key Findings from the 2008 Health Tracking Physician Survey, Data Bulletin No. 35, Center for Studying Health System Change,
Source: Qessential Market Research. Physician Outlook: Pulmonology, Spring 2013
AMA 2012 Physician Practice Benchmark Survey
8
Response rate: 28 percent
Responding physicians: 3,466
Weights constructed to correct for possible non-response bias
All data are weighted
53.1% of non-solo physicians received all or the largest share of their compensation
from salary
31.8% of non-solo physicians received all or the largest share of their
9
Notes: For ownership status, significance tests are shown relative to the owner category. For type of practice, they are shown relative to the single specialty category. ‘a’ is p<0.01, ‘ b’ is p<0.05 and ‘c’ is p<0.10.
Some of the External Forces at Play
Flat Medicare physician payments vs. practice cost increases (minimal updates,
sequestration cuts, etc.)
Medicare penalties for failure to become meaningful users of electronic health
records
Medicare penalties for failure to satisfy Physician Quality Reporting System
requirements
Medicare value-based modifier and increasing interest in performance-based
payment methodologies
Movement to bundled payment
Movement to accountable care organization model, with shared savings and/or
shared losses
Growing interest in global payment (e.g., partial or full capitation) Narrowing of health plan provider networks
Movement to provider tiering
Increasing transparency/public reporting of physician performance data Greater focus on care coordination
Source: 2013 Medicare Trustees’ Report; American Medical Association, “Now is the time to transform the broken Medicare System,” 2013
15 Clinical care Population/ Community Health VALUE MODIFIER SCORE Quality of Care Composite Cost Composite Patient experience Patient safety Care coordination Efficiency
Total overall costs Total costs for specific conditions
Quality/cost Low cost Average cost High cost
High quality +2.0x* +1.0x* +0.0%
Average quality +1.0x* +0.0% -1.0%
Low quality +0.0% -1.0% -2.0%
16
2016 Value-Based Payment Modifier Amounts for the Quality
Tiering Approach
* Groups of physicians eligible for an additional +1.0x if reporting measures and average beneficiary risk score in the top 25 percent of all risk scores.
Growing Provider Interdependence
Medicare inpatient hospital payments partially dependent on
minimizing hospital readmission rates (e.g., all-cause, unplanned
readmissions of patients originally admitted for an acute
exacerbation of COPD), which can stem from actions taken or not
taken by non-hospital staff.
Medicare outpatient hospital payments partially dependent on
hospitals obtaining data from physicians and other sources and
reporting related quality measures to CMS.
Appropriate follow-up interval for normal colonoscopy in average risk patients
Improvement in patient’s visual function within 90 days following cataract surgery
Repeal the SGR methodology
Provide specified updates to the Medicare physician fee schedule
conversion factor for several years
Implement a new performance-based methodology for future updates or
incentive payments, under which individual physicians or physician
groups are assessed against specified performance measures
Allow physicians participating in certain alternative payment models
(APCs) to ignore the new performance-based methodology and/or receive
specified bonus payments/more generous future payment updates
18
19
MSSP and Pioneer ACO Counts by County: May 2013 (counties with more than 1 percent of an ACO’s assignees)
The Physicians Foundation, A Survey of America’s Physicians:
Practice Patterns and Perspectives, 2012
Medicare Shared Savings (ACO) Program: Interim
Financial Results
21
About 47% of 114 ACOs that started the program in 2012 have lowered
expenditures below expected levels in the first 12 months.
About 25% of 114 ACOs generated shared savings—with more than $126 million
going to the ACOs and $128 million in net savings for the Medicare Trust Funds.
CMS says these interim results are “within the range originally projected for the
program’s first year,” with a “great majority” of the program’s overall net impact “projected to phase-in over the program’s ensuing years.”
CMS Request for Information:
Evolution of ACO Initiatives
22
CMS is seeking input on models that:
Transition ACOs to full insurance risk;
Hold ACOs accountable for total Medicare expenditures (Parts A, B, and D); Integrate accountability for Medicaid outcomes; and/or
Offer ACOs payment arrangements with multiple accountability components
(such as shared savings/losses, episode-based payments, and/or care management fees).
Bundled Payments for Care Improvement (BPCI) Initiative
Model 1: Retrospective Acute Care Hospital Stay Only (hospital services only) Model 2: Retrospective Acute Care Hospital Stay plus Post-Acute Care (including
physician services during the episode)
Model 3: Retrospective Post-Acute Care Only
Model 4: Prospective Acute Care Hospital Stay Only (including inpatient physician
services)
***Participating organizations must give Medicare a discount. ***Gain-sharing permitted under all 4 models.
So far, 232 organizations have entered into agreements to participate.
On February 14, 2014 CMS invited more organizations to participate in Models 2-4.
February 2014 CMS Request for Information
24
Seeking input regarding procedural episode-based payment
opportunities.
Focus is on specialty practitioners and outpatient care. Scope includes both surgical and non-surgical procedures.
CMS says payment model could include “any or all” services furnished throughout the duration of the episode, including anesthesia, diagnostic tests, prescription drugs, and even facility payments (e.g., ASC).
Seeking input regarding complex and chronic disease management
episode-based payment opportunities
CMS says intent is to incentivize specialists to more efficiently manage care. Scenarios could include situations where the specialist is responsible for the
Chronic Care Management Services
25
Medicare is creating a new code to describe non-face-to-face, care
management and coordination services furnished by a physician practice
to patients with two or more chronic conditions that are expected to last
at least 12 months or until the death of the patient, and that place the
patient at significant risk of death, acute exacerbation/decompensation,
or functional decline.
To qualify to receive yet-to-be-specified Medicare payment amounts for
these services, a practice will need to meet yet-to-be-specified standards.
Effective date: January 1, 2015.
State Health Care Cost Containment Commission: January
2014
“The goal is straightforward but ambitious: Replace the nation’s
reliance on fragmented, fee-for-service care with comprehensive,
coordinated care using payment models that hold organizations
accountable for cost control and quality gains.”
States should use health spending programs they administer or
oversee to support formation of high-performing coordinated care
organizations that accept risk-based, global payments. Programs
that states can use for leverage include Medicaid, the state
employee health program (which can be combined with local
government employees for increased influence), and health
insurance exchanges.”
Better Care, Lower Cost Act
28
Sponsored by Senator Ron Wyden (D-OR)
Targeted at “medically complex” Medicare/dual eligible patients who are
at enhanced risk for hospitalization, limitations on activities of daily
living, or other significant health concerns as a result of their chronic
disease(s)
Envisions a new type of entity, the Better Care Program (BCP), which
could involve a multidisciplinary team of health professionals, a health
plan, independent health professionals partnering with an independent
risk manager, networks of individual practices of health professionals
(including Federally qualified health centers, rural health clinics, etc.),
and certain other organizational frameworks.
Better Care, Lower Cost Act, Con’t
29
Qualified BCPs must include physicians, nurse practitioners,
registered nurses, social workers, pharmacists, and behavioral
health providers who commit to caring for BCP-eligible individuals.
Qualified BCPs would be paid on a capitated basis and would be
responsible for the full continuum of care required by BCP-eligible
individuals (except for long-term care).
Better Care, Lower Cost Act, Con’t
30
BCPs would be allowed to modify usual cost-sharing to incentivize
use of high-value, high quality services.
Bonus payments would be available for BCPs meeting quality and
other requirements.
RAND Health Research Report, 2013
“Leaders in multiple practices reported that transitions from
one payment model (e.g., fee-for-service) to another (e.g.,
shared savings or capitation) would be complicated, with
physicians receiving mixed incentives from different payers.
In response to these concerns, several practices sought
economic security by increasing their size or becoming
affiliated with hospitals and large delivery systems. Leaders
of smaller, independent practices that did not initiate such
growth or affiliation described feeling pressure to join larger
systems, sensing that it would become more difficult in the
future to remain independent from these systems as a
consequence of health reform.”
Audience Response System Question #1
32
Does your current physician practice participate in the
following:
A.
One or more accountable care organizations (ACO)
B.
One or more bundled payment arrangements
C.
Both ACO and bundled payment arrangements
D.
None of the above
Does your current physician practice participate in
the following:
A.
One or more accountable
care organizations (ACO)
B.
One or more bundled
payment arrangements
C.
Both ACO and bundled
payment arrangements
D.
None of the above
A. B. C. D.
11%
53%
17% 19%
Audience Response System Question #2
34
Given what you have heard today regarding external forces
affecting physician practices, do you believe that small, single
specialty physician practices (1-2 doctors) will remain viable
over the next 5 years?
A.
Yes
B.
No
Given what you have heard today regarding external forces
affecting physician practices, do you believe that small, single
specialty physician practices (1-2 doctors) will remain viable
over the next 5 years?
A.
Yes
B.
No
C.
Not Sure
A. B. C. 15% 10% 75%Practice Models vs. Model Practices
36
Concierge/direct-pay practice variations Hospital or other employment status Physician-hospital organizations
Market-spanning single specialty groups Large multi-specialty group practices Independent practice associations
Patient-centered medical homes/ambulatory intensive care units (medical homes for
high-risk patients)
Extensivist model (care coordination for people with chronic illness) Accountable care organization
Risk-bearing physician groups
Physician group- or hospital-sponsored health plans Virtual groups
Globally integrated health delivery system Many Others
37
Source: MGMA. 2011, as cited by Jeff Goldsmith in “The Future of Medical Practice: Creating Options for Practicing Physicians to Control Their Professional Destiny,” 2012.
Perceived Benefits of Hospital-Based Employment
Relief from administrative responsibilities
Greater access to leading-edge health information technology tools
A more manageable work week
Stability in a business environment made uncertain by
developments such as payment reforms
Source: Accenture Physician Survey, 2011
The Physicians Foundation, A Survey of America’s Physicians:
Practice Patterns and Perspectives, 2012
Food for Thought
“[I]t is possible for a physician practice to be acquired by a hospital,
not change locations or even practice operations, yet the hospital
now receives significantly higher Medicare payments if it meets the
criteria for achieving provider-based status.”
“The recent acceleration in hospital employment of physicians runs
the risk of raising costs and not improving quality of care unless
broader payment reform reduces incentives to increase volume and
creates incentives for providers to change care delivery to achieve
real efficiencies and higher quality.”
Center for Studying Health System Change, “Rising Hospital Employment: Better Quality, Higher Costs?” Issue Brief, August 2011
Possible Accountability Standards
for Physician Compensation Models
Physician compensation models “should encourage and incentivize
physicians to be more accountable” for:
Patient outcomes
Overall patient satisfaction
Administrative responsibilities (e.g., electronic health record implementation) Physician recruiting
Serving on committees Practice marketing efforts
Mentoring young physicians new to the practice
Source: Lee Ferber, “The New Models for Physician Compensation,
www.heplive.com/physicians-money-digest/practice-management/The-New-Models-for-Physician-Compensation
Food for Thought
“[I]f the physician is paid merely for his or her clinical effort, every
dime of the cost savings generated by more effective and better
coordinated physician care is captured and absorbed as profit by
health insurers or their self-funded employer customers. By
assuming some level of risk for the future cost of caring for their
patients, not only do physician groups and IPAs reap the rewards for
more effective clinical care but also they might escape the costs of
minute-by-minute surveillance of their practices and reduce the
administrative complexity of health care payment.”
Source: Jeff Goldsmith, “The Future of Medicare Practice: Creating Options for Practicing Physicians to Control Their Professional Destiny,” 2012, The Physicians Foundation
FTC Advisory Opinion: Norman (Oklahoma) PHO
47
Organization proposed to form a network to offer clinically integrated services as a
vehicle for improving quality of care, reducing costs, and increasing patient
satisfaction, and to jointly negotiate the payer contracts for its physicians’ services.
About 280 participating physicians, representing about 38 specialty practice areas.
Includes most of the physicians who practice in and around Norman, Oklahoma
$350 membership fee and $150 annual dues, plus ongoing financial contributions, in
the form of “withholds” from reimbursements made to them by payers who contract with the Norman PHO, to support the network’s clinical integration activities.
The PHO will be non-exclusive, allowing payers to contract with individual member
FTC Advisory Opinion, Con’t
48
Norman PHO will require all participating physicians to participate in all
contracts between Norman PHO and payers.
Norman PHO anticipates that its proposed new program will generate
meaningful savings and efficiencies that will benefit patients, payers, and participating providers.
The program will involve developing, implementing, and enforcing
evidence-based practice guidelines, and use of an electronic platform by participating physicians.
The electronic systems will be used to perform medical record audits and to
generate reports on individual and aggregate performance relating to cost, utilization, and quality of care measures.
Norman PHO, Con’t
49
Norman PHO and its participating physicians will be making meaningful
contributions, including investments of human capital, time, and money, to the development of the infrastructure, capabilities, and mechanisms necessary to jointly realize their projected efficiencies.
Norman PHO expects to negotiate higher reimbursement rates for its
participating physicians “because the proposed program will require increased utilization of physician resources to offer the potential to achieve greater
Norman PHO: Projected Benefits
50
Patients:
improved outcomes; better adherence to preventive screenings and services; reduced medical errors, etc., etc., etc.
Payers:
centralized credentialing and contracting; more satisfiedbeneficiaries; elimination of unnecessary duplication of services, etc., etc., etc.
Participating Providers:
reduced paperwork; greater ease ofscheduling; improved patient diagnosis and treatment plans through timely receipt of diagnostic information and availability of clinical practice guidelines, etc., etc., etc.
Norman PHO: FTC Findings and Conclusion
51
Important that Norman PHO is developing a program that promises meaningful
cost reductions and efficiencies, and improved quality of care.
Important that the joint contracting of physician fees “appears to be subordinate
[that is, “ancillary”] to the network’s effort to improve efficiency and quality through the clinical integration of its participating physicians.”
Important that Norman PHO plans to take steps to avoid operating as a de facto
exclusive network.
Important that Norman PHO plans to take steps to warn participating physicians
to avoid taking collective action in dealing with payers outside of the PHO (“spillover effects”).
In light of the above, FTC staff would not recommend an antitrust enforcement
St. Luke’s Health System, Idaho
52
Acquired the Saltzer Medical Group, a for-profit, physician-owned multispecialty
group, effective December 31, 2012.
Combined entity included 80% of the primary care physicians in Nampa, Idaho. In January 2014, the Federal District Court concluded the arrangement was
anti-competitive and ordered St. Luke’s to unwind the acquisition
The court concluded that there was a substantial risk the combined entity would
use its dominant market share to negotiate higher reimbursements with health plans, and charge more services at the higher hospital billing rates.
The court also found that St. Luke’s had not carried its burden of showing
convincing proof of significant and merger-specific efficiencies arising as a result of the acquisition.
St. Luke’s-Saltzer Medical Group, Con’t
53
Deal included a 5-year professional services agreement (PSA) that prohibited the
Saltzer physicians from becoming employed by or financially affiliated with other health systems or hospitals.
The PSA provided Saltzer physicians a guaranteed salary with additional
compensation based on RVUs.
Although the district court judge believed that the acquisition would have the
effect of improving patient outcomes if left intact, he argued that there are other ways to achieve the same effect that do not run afoul of the antitrust laws.
Audience Response System Question #3
54
What factor(s) does the Federal Trade Commission consider important in determining that a health care arrangement, such as a physician-hospital
organization, which involves joint contracting of physician fees, would not be challenged as anti-competitive:
A. The arrangement is expected to generate meaningful savings and efficiencies,
and improved quality of care.
B. The joint contracting of physician fees is ancillary to the arrangement’s efforts
to improve efficiency and quality through clinical integration.
C. There is evidence that participants in the arrangement will avoid taking
anti-competitive actions, such as collectively agreeing to refuse to contract with payers outside of the arrangement.
What factor(s) does the Federal Trade Commission consider
important in determining that a health care arrangement, such as a
physician-hospital organization, which involves joint contracting of
physician fees, would not be challenged as anti-competitive:
A. The arrangement is expected to generate
meaningful savings and efficiencies, and improved quality of care.
B. The joint contracting of physician fees is
ancillary to the arrangement’s efforts to improve efficiency and quality through clinical
integration.
C. There is evidence that participants in the
arrangement will avoid taking anti-competitive actions, such as collectively agreeing to refuse to contract with payers outside of the arrangement.
D. All of the above. A. B. C. D.
9%
88%
3% 0%
Centers for Advanced Orthopaedics
Described as a “joint corporation”
25 practices, about 130 physicians
32 zip codes, District of Columbia, Maryland, Pennsylvania,
Virginia, West Virginia
Share administrative, technology and marketing costs, as well as
reimbursement contracts with insurers and employee benefit plans
Includes various orthopedic specialists and non-orthopedic
professionals, including podiatrists, neurologists, rheumatologists,
physiatrists, physical therapists, etc.
Centers for Advanced Orthopaedics
Greater purchasing power (malpractice insurance, medical
supplies)
Negotiating power vis-à-vis insurers, etc.
Clinical cooperation, identification of best practices
“Practices will continue to operate as individual business units
managed by their physicians, who now share ownership in the
umbrella corporation, too.” (Washington Post, January 14, 2014, p.
A11)
Presented as a better alternative to hospital employment (for
patients and physicians)
Kindred Healthcare: Post-Acute Care Integration
59
Embarked on a 5-year plan to create integrated-care markets across the country So far, Kindred has established 12 such markets
Each is designed to provide a full array of post-acute services, including
transitional hospital care, short-term rehabilitation, skilled nursing, home health, palliative care and hospice
Patients referred by hospitals to Kindred facilities are assigned to a
transitional-care nurse, who acts as their transitional-care navigator throughout the duration of their post-acute care
Audience Response System Question #4
60
Given what you have heard today regarding external forces
affecting physician practices and recent physician practice
model developments, are you likely to consider changing your
existing physician practice model over the next 3-5 years?
A.
Yes
B.
No
Given what you have heard today regarding external forces
affecting physician practices and recent physician practice
model developments, are you likely to consider changing
your existing physician practice model over the next 3-5
years?
A.
Yes
B.No
C.Not Sure
A. B. C. 45% 16% 39%TIME FOR EASY
QUESTIONS
62
